State Savings

janedoe17

Hi guys, I have a quick question about the An Post State Savings. I was thinking of starting an account here, and was wondering whether this is just for a once off deposit, or whether I can make regular deposits to the account. If I could make regular savings, how does this affect my interest rate?

TIA

JTMan

Depends on the State Savings product.

Which product are you considering?

gholian

AS far as I know the interest on the regular saver is very low. There is a 3 year, 5 1/2 year and 10 year lump sum accounts. These were great a few years ago but now the interest is very low. I had a 3 year account which matured last July and I get 10%interest tax free. Now this account only gives 2.5% interest over 3 years. The 5 1/2 year account only gives 4% now, was 21%.

Delta2113

The 6 year product is odd - only let's you do regular savings for 12 months and then you leave your money to mature.
3,4,5 not as good but still the best around.
10 years is a long time but might suit some people. Make sure you won't need the money.

fepper

gholian wrote: »

AS far as I know the interest on the regular saver is very low. There is a 3 year, 5 1/2 year and 10 year lump sum accounts. These were great a few years ago but now the interest is very low. I had a 3 year account which matured last July and I get 10%interest tax free. Now this account only gives 2.5% interest over 3 years. The 5 1/2 year account only gives 4% now, was 21%.

5 1/2 year saving cert is 7%

newacc2015

Over the long term. You are always better off putting your money into yearly bonds (which saving certs basically are) than long term "higher" interest bonds. Shorter term bonds always allow you to take advantage of increasing interest rates. There is a strong possibility that interest rates will be higher in 3 years and that you will be losing out locking into a longer term bond

gholian

fepper wrote: »

5 1/2 year saving cert is 7%

Working from what I can remember. My point is it was 21% 3 years ago, now only 7%.

janedoe17

Thanks for the advice. I'd been thinking of the ten years account but I might reconsider now. I want to make the most of my money.

With any of these savings is it only a once of deposit or can I make continuous deposits?

newacc2015

janedoe17 wrote: »

Thanks for the advice. I'd been thinking of the ten years account but I might reconsider now. I want to make the most of my money.

With any of these savings is it only a once of deposit or can I make continuous deposits?

A 10 year account would ridiculous. AER is 2.26% would barely cover modest inflation in a few years.

All of them are one off deposits. One is sort of a regular savers,as you put in monthly payments for 12 months and they hold it for 5.5 years then. I doubt there is anything stopping you buying them every few months.

IMO I would buy the 3/4 year issues. I'm guessing the ECB will be upping rates then and you will see the interest rates rising on new bonds, if you choose to reinvest then.

If you have any form of debt eg credit cards or a mortgage. I would try to pay those off before putting money in such low yield bonds

nagel

got this bit of advice a few years ago if putting in say 30k do 3x10 instead of 1X30 in case you wished to withdraw 10k you would lose only interest on that 10k

billyhead

I have a monthly direct debit with An Post for €400 which goes into the 10 year National solidarity bond. I was just wondering from anyone in the know should I look elsewhere for this investment. I already have a rainy day fund in the AIB so wont need to go near the bond money. I am also paying already into a private pension. The aim was to build up such a sum with the 10 year bonds that when my mortgage term finishes and my house is owned by me I could sell the house and out the savings bond returns and money paid into it towards moving into buying a house with cash nearer to the city as I live currently on the outskirts.

newacc2015

billyhead wrote: »

I have a monthly direct debit with An Post for €400 which goes into the 10 year National solidarity bond. I was just wondering from anyone in the know should I look elsewhere for this investment. I already have a rainy day fund in the AIB so wont need to go near the bond money. I am also paying already into a private pension. The aim was to build up such a sum with the 10 year bonds that when my mortgage term finishes and my house is owned by me I could sell the house and out the savings bond returns and money paid into it towards moving into buying a house with cash nearer to the city as I live currently on the outskirts.

If you are on a mortgage that allows over repayments. Over repay the mortgage. Not all mortgages allow this, so you need to check. The rates on the 10 year solidary bonds are too low and could easily be eroded by inflation in a few years if the bond interest rate is fixed.

I would try and see if you repay your mortgage earlier. Or even refinance if you can in a few years and take a chunk off the mortgage in the process. Over repaying a mortgage can take several years off the mortgage.

billyhead

newacc2015 wrote: »

If you are on a mortgage that allows over repayments. Over repay the mortgage. Not all mortgages allow this, so you need to check. The rates on the 10 year solidary bonds are too low and could easily be eroded by inflation in a few years if the bond interest rate is fixed.

I would try and see if you repay your mortgage earlier. Or even refinance if you can in a few years and take a chunk off the mortgage in the process. Over repaying a mortgage can take several years off the mortgage.

Thanks newacc2015,

I would love to repay the mortgage earlier but unfortunately its one of those affordable houses with the council and I am locked in for a 20 year term with them because if I sell the house sooner I will have to pay back a clawback amount which reduces each year after year 10 of the term. With the money I have paid into State bonds already I would have enough to buy the remainder of the mortgage out. I have 10 years left on the term.

newacc2015

billyhead wrote: »

Thanks newacc2015,

I would love to repay the mortgage earlier but unfortunately its one of those affordable houses with the council and I am locked in for a 20 year term with them because if I sell the house sooner I will have to pay back a clawback amount which reduces each year after year 10 of the term. With the money I have paid into State bonds already I would have enough to buy the remainder of the mortgage out. I have 10 years left on the term.

If you look at my previous posts. In the long run average, shorter term products give a higher return, as you can reinvest as interest rates go up. They will probably stay constant for the next few years. But I imagine they will increase after that

Delta2113

http://www.irishtimes.com/business/personal-finance/interest-rates-slashed-on-an-post-savings-products-1.2673413


Interest rates slashed on An Post savings products
Popular An Post 30-day notice deposit account also being abolished

Arciphel

Saw that. What's the overall interest rate going to be on the ten year bond now?

Delta2113

Arciphel wrote: »

Saw that. What's the overall interest rate going to be on the ten year bond now?

1.50%

billyhead

I have a monthly direct debit set up for the 10 year national solidarity bond. Where would be the bes tplace to save this now to obtain th greatest return on the investment?

Arciphel

Delta2113 wrote: »

1.50%

Thats the AER, I meant the overall after ten years. Just checked their website, its now gone to 16%.

"16% return on your investment after 10 years (AER 1.50%)"

Some change from the 40%, then 25% they were doing.

Charles Babbage

Delta2113 wrote: »

http://www.irishtimes.com/business/personal-finance/interest-rates-slashed-on-an-post-savings-products-1.2673413


Interest rates slashed on An Post savings products
Popular An Post 30-day notice deposit account also being abolished

This was bound to happen, probably only the delay in forming the government kept it this long.

billyhead

Charles Babbage wrote: »

This was bound to happen, probably only the delay in forming the government kept it this long.

I have a current account in Aib. Would i be better off saving to the online accounts such as one of these

http://personal.aib.ie/our-products/savings-and-deposits/Deposit-Rates.

As far as I know the State savings accounts are not subject to DIRT

amondenise

I am a college student in my final year and personally, for me the 6 year instalment savings works out the best for me. I'm putting in 1000 per month. Then my 12,000 will be earning interest for 6 more years which will give me around €600. But I know its not for everyone because 6 years is a long time...

Hope this somehow helps ðŸ˜